Special Interest and Florida Politics

How does special interest hurt real estate? Here is but one example. NEW CONSTRUCTION! Why has Congress not put a moratorium on speculative building? Why are new homes being built, “spec houses” as they are called in the realty world. Why are new homes being added to the stockpile of available inventory when new construction sales are the worst since 1991? Clearly, it would help if builders were slowing down. This would allow some of this inventory to dissipate and allow the market to stabilize!

Who are major contributors to political campaigns? Builders and developers! If they (political ones) did what was right, they lose re-election funds for the next election. They say “Catch 22” and I say, “What a mess”. For once, Politicians need to do the right thing! The new sales tax (.01) to replace public school funds (replaces that part of the property tax bill) makes sense and is a fast track to stabilizing the Florida realty market. It needed to be on the ballot. Florida State Politicians almost got it wrong again! It passed (to get on the ballot in November) by ONE VOTE! The economy is walking a fine line! How about raising cigarette tax by .50 per pack? Beer sales by .25 per bottle ($1.25 per six pack). Those taters will still buy beer and cigarettes. Why not? Who do you think are HUGE political contributors to the Politicians of Florida are? Now you are starting to get the picture!

Bad Advice

One of the most frustrating things Realtors have to deal with in real estate when competing against other agents for listings is “bidding up” prices. Many times, the Sellers are not interviewing Agents, the are auctioning Agents. In other words, they simply select the Agent who tells them the highest price to list at. They will ignore the more experienced Agents and go with one who tells them what they want to hear…… and those agents are laughing all the way to the bank! Want to know how? Check out this video at www.sellwithvince.com/pricingVideo.html.

Flat out, if you purchased your home in 2005 or 2006, it is not worth more today than it was back then……..no matter what a wishful thinking, inexperienced Agent tells you. Facts are facts. In a declining market, pricing your home correctly is more critical than in any other market. In 2004, you could overprice for example and simply wait a few months for the market to catch up to your price. Not so today!

In 2008, not only are you making payments and carry (taxes, insurance, maintenance costs), but your value is in decline. A $400,000 home in 2005 is now worth $300,000 for example. Most of the loss or “crash” has happened in the past 12 months. Say this seller listed at $370,000 six months ago when the home was worth $350,000. As they begin to reduce the price, so dropped the market in conjunction. Unless that seller cut the price to get in FRONT of the price curve, he will be in trouble. Six months ago, he should have been at $350,000, today, six months later, this same Seller is at $320,000 when he should be at $300,000. Had he priced right from day one with an experienced Agent, he would be $50,000 ahead of the game, plus the carry.

Bottom line is this: The more reputable, experienced, HONEST Agent that tells you the truth, will net you more money than taking the advise of an ignorant or inexperienced Agent when it comes to pricing your home. Look at each Agents Market Analysis. See HOW the Agent came up with the price. Look at the FACTS. Sometimes the experienced Agent will give you the HIGHER price. What is important is that you look at the material, see how much work and analysis the Agent did to come up with the price. Most important, use your brain and not your heart when pricing!

Happy Selling!

Just Say NO to OPEN HOUSES!

Many consumers are surprised when I tell them that OPEN HOUSES are an ineffective means to selling YOUR house in 2008.  Why would an agent do an OPEN HOUSE if it were ineffective? I did not say it was ineffective for selling houses (as in  not yours)!  Realtors use OPEN HOUSE signs to draw in potential Buyers into a home. They sign them up on the “Welcome Sheet” or “Sign In” sheet. They gather that Buyers criteria and when the house they are looking at is not what they are looking for (and drive by Buyers, statistically can’t afford the house they initially call Agents on), they get drawn into another, more suitable house and BOOM, the agent makes a commission. REPEAT, REPEAT, REPEAT!

AGENT OPEN HOUSES? Same game, different players. Real Estate Brokers go to these events to try and get to know Agents from other offices. As they befriend them, they start the process of trying to recruit them to come work at that office. Agents to Brokers are what listings are to Realtors……. MONEY. It’s all a complex game and many Agents don’t even realize what they are doing. They just do what they have been taught (“Open Houses to attract prospects” new agents are taught by office managers)!

To grasp this OPEN HOUSE thing, we need to visit the past.  About 20+ years ago, there were virtually no computers in real estate (unless you worked for ERA-Electronic Realty Associates). We had the MLS BOOK. This was a MONTHLY print that had all the properties in MLS listed with an abbreviated description of the home and sometimes a very small black and white picture of that listing. This small picture, about the size of your two thumbnails put together and an abbreviation like this “3br, 2 ba, CHA, pool, 2000sq/ft on 1AC, $148K”. Well as you can imagine, the book came out once a month, so if you listed on the 2^nd day of the month, you were not going to be in this book for 4-5 weeks. HELLO BROKER OPEN HOUSE! The listing agent throws a party for Real Estate Agents, invites all the area offices and agents to visit! This is how agents found out about available houses BEFORE the book came out! Need to know the latest inventory in an area? Tuesdays from 10:30 until 2:00 as an OPEN HOUSE! On Saturday or Sunday, the listing agent held an OPEN HOUSE for the same reason!

Hello modern era! Today, we can instantly list a home and put 20, high resolution pictures in MLS along with a Virtual Tour while we are at the home. Your home is listed and in the MLS before the agent leaves your home (if they did their homework and have a digital camera on hand). Potential Buyers can look at available homes on their PC at 3:00 A.M. in the comfort of their own home. They know if they have a liking to a home before they even get to the house! Further, the descriptive area is almost unlimited! Now we can describe the home in ENGLISH and in vivid detail! In 2008, we sell houses and the Buyer has never seen the home in person until the walk into it AFTER they close it! Technology is wonderful…. if you hire an agent that knows how to use it!

Bottom line is this: OPEN HOUSE is a grasp at straws, looking for a needle in a haystack in my opinion. It is the Agent trying to stick a pacifier in the Sellers mouth because they lack the necessary skills to sell houses in today’s complex market. Either you can use modern up to date marketing, or you fall into yesterday’s antiquated way of doing business! To learn more, go to www.sellwithvince.com and click the links that apply to your individual situation! If your Rolex is missing after an OPEN HOUSE, you can say Vince Arcuri warned you!

Builder Beware!

To the exit doors they go! All those real estate agents that got into the business for the easy money are gone, or heading for the exits! Same goes for lenders! Only the reputable few remain! Some of those cocky sales reps for the builders, the ones who were asking veteran agents to “leave” the model centers because we were working with “investors” in 2005 are now working where? The few that remain? In 2005, they were very cocky, not wanting the investor business. Flash forward to 2008. If I brought Osama Bin Laden into the model center, not only would they sell to him, they would ask if any other Al Qaida members were looking in the area.

Those builders I hope learned a lesson. Don’t shut down the veteran agents. When you need the sale (like in 2008), we can’t keep your reps out of our office! If I want to go to a football game or a concert, I can get myself tickets. I don’t need a builder to entertain me to obtain my loyalty. All we needed was to be treated with the respect we deserve, not the disrespect and cocky attitude that you told your reps to dump on us in 2005.

Many agents have long memories, I know I do. As the market slowly recovers, Veteran Agents will remember who took care of them in good and bad times, and who had the attitude. Nice job guys, I guess you thought those good times would never end. As your model centers close and as you lay off yours reps, always remember that you have to pass those agents you stepped on as you go down the ladder that you went up.

To the ones that treated us right, we have and will continue to do business with you, like we always have. Funny how fast time flies from 2005 to 2008!

Message to the consumer: When you hire and agent, make certain you go with a veteran. Over the years we have established relationships with all vendors. If you purchased a home in 2005 or 2006…… the good times, those builders that I mentioned above are not going to be very happy about fixing your cracked tile or leaky roof in 2008. Rest assured, the reputable builders will still honor their work. Funny, how in this unstable market, how the ones who were steady the past 10-20 years are still steady. Realtor, Builder, Lender, Bank. Experience the difference.

Turn in Your Keys?

On March 31, Fannie Mae sent out new guidelines to lenders intended for walkaways and other foreclosure situations. Fannie will now prohibit foreclosed borrowers from getting another mortgage through the giant investor for five years. 

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I say to this WOW!  What it boils down to is this: The lenders are waiting for the Federal Government to bail them out. When they were clipping borrowers for 9% or 9.5% loans in 2005 things were GREAT, the REASON they charged those rates was R I S K. Now that the greed plan did not pan out, everybody sits back and waits to see what Uncle Sam is going to do. 

Freddie Mac? Fannie May? They say “hey, lets see if we can make it worse” and release new guidelines to try and scare property owners from walking away from homes!  GREAT IDEA!  The problem is this…….. many (not ALL) property owners are SMART for walking away. They owe $150,000 more than the home is worth. They make $50,000 per year.  Why would they pay that loan to a lender who is unwilling to work with them on this worse than expected realty market? Why would they spend 10 years to get “right sideup” again when the lender who tried to rape them at 9.5% is unwilling to help? If lenders are not going to take “Short Sale Offers” while waiting for the government to step in, what option are they giving the average layman? Can they forgive the back payments and add them to the rear of the loan? No! Will they refinance those borrowers into today’s rate? NO, will they sell the home to an investor for less?  Eventually. But to THE property owner, there is threats, intimidation, relentless harassing calls and every attempt is made to make their life miserable in despicable attempts to force borrowers to come up with monies they don’t have.  A novel idea is this: Try helping them out!

If lenders don’t get a grip on this situation FAST, foreclosure and bankruptcy filings will be even greater than they are today. As bad as you may think it is, the current lending guidelines are making “turning in your keys” the smart thing to do sometimes.

For more information, go to www.myforeclosureattorney.com and know your options!

China and the USA

U.S. Lenders beware! China has TRILLIONS to invest in the USA! Today, they are investing over ONE BILLION in our stock market! They plan on getting more aggressive as the months pass. I wonder what would happen if China started offering mortgages in the USA? With US Banks and lending institutions tightening lending standards, what is to stop China from loaning money here? Imagine if the nightmare! What if the past two years was erased? All the bad loans and foreclosures were wiped out? A fresh start for everybody! China has that opportunity now! They were not involved with any loans or the sub-prime nightmare we are living in today! In ten years, they could hold mortgages on a significant portion of loans in our country!

I do not believe this would be good in the long term! China a player in our real estate business here in the USA? What would happen if they called all the notes due if we had another real estate boom and they were the only ones lending money? They just take all of the equity of our property owners? If they were the primary lender, who could stop them from adding this clause to the fine print of the loan? I could write for days about it but I will leave it at this. What if they sold all the stock they have purchased the past few years all at one time? What would happen to our economy?

WAKE UP WASHINGTON!

Loaning money is what caused this mess and loaning money again is the only way out! Learn from your mistakes, actually look at the applicant! If they were delivering pizza 4 months ago, don’t give that guy a $400,000 loan (yes, that did happen because I know the couple). Tightening of the belt is smart, turning down loans in this market will couples with 740 credit scores that have been working at the same job for 20 years (yes, I have seen this as well) is too tight!

There is light at the end of the tunnel, but our government needs to be the one to step up and fix it, not a foreign country!

Media & Real Estate

As we all know, real estate is the darling story of local and national media. When the market was roaring (2004, 2005, first quarter of 2006), all we heard were stories of double digit increases in value and six figure profits from “flippers (remember those “day traders” in the stock market boom?). All cashing in on real estate. Rags to riches……. riches to rags! “When will be bubble burst” and “when will the market return” were all and are, topics of conversation and the focus of the media. Why not? Who does not love real estate?

The media has portrayed the sub prime scandal and the bulk of the real estate downfall. The truth is, sub-prime loans were less than 10% of all loans issues from 2004-2006. Further, of those sub-prime loans, only about 12% of those sub-prime (remember, that is 12% of the 10%) are in danger to or have defaulted! A very small percentage of loans.

I know in Florida, unexpected insurance hikes and the increased tax base of homes has caused more damage to the sunshine state than sub-prime loans. If we can fix those two issues, Florida, as usual, will lead the nation in real estate comebacks. Gas prices? HUGE impact on real estate and everything else! Again, in the 1970’s…………… remember the gas lines?

I recently read an article, written by John L. Scott. In it, he pointed out that if a buyer purchased an average priced home and put a 10% down payment, after 10 years at an average return of 5%, that $10,000 investment would equal $110,300. He pointed out that this same $10,000 invested in the stock market at a 10% return, would yield $23,600.

We are simply in a cycle. It happened in the early 70’s, the late 80’s and again today. Who made the most profit in those times? Those who purchased at or near the bottom. Where are we today? Happy investing! GO, GO, GO!

 

 

The “I Quit” Mistake

Here we are in a much different market than anyone could have imagined a few years ago. We keep hearing about the foreclosure boom. Most sellers are unaware that they have rights. They get a letter from the mortgage company saying that they are 3-4 months behind on payments and that the lien holder is going to file suite against the property owner. They get scared and move out.

MISTAKE.Those Sellers have rights. A reputable real estate attorney is your best bet for legal advice, but I will tell you that the “Short Sale” era is here. There is no need to be foreclosed upon. Many times you can stay in your home until it sells. Maybe it will take a year or sometimes two for the lender to get a reality check, but I will tell you that if you are in this situation and decide to just “walk away” from the house without consulting an attorney, you are making a huge mistake. A great website to visit is www.myforeclosureattorney.com . Know your rights before you make a bad situation worse.

Most lenders will work WITH YOU, not against you. If you need help, you must know the right way to ask for it. You can make the BEST out of a BAD situation.